State spent $3 billion on lawsuits, legal fees in past decade

Lopez matter stirs interest in cost of legal actions against the state

James M. Odat, Times Union

By James M. Odato

Updated 12:50 pm, Monday, February 24, 2014

Assemblyman Dennis Gabryszak.
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Assemblyman Dennis Gabryszak.

Assemblyman Dennis H. Gabryszak's seat is empty during the opening prayer at the New York State Assembly opening session Wednesday, Jan. 8, 2014, at the Capitol in Albany, N.Y. (Skip Dickstein / Times Union)

Assemblyman Dennis H. Gabryszak's seat is empty during the opening...

The name plate of Assemblyman Dennis Gabryszak has been taken off the wall outside his office at the Legislative Office Building seen here on Monday, Jan. 13, 2014, in Albany, N.Y. Gabryszak resigned his seat on Sunday. (Paul Buckowski / Times Union archive)

Stephanie Friot, a former employee of New York state Assemblyman Vito Lopez, in New York, Aug. 29, 2012. Five women, including Friot, who once worked for Lopez described in interviews an atmosphere of sexual pressure in his office, suggesting a longstanding pattern. (Angel Franco/The New York Times)

Stephanie Friot, a former employee of New York state Assemblyman...

Attorney Gloria Allred is representing two women who accused New York State Assemblyman Vito Lopez of sexual harassment. Allred, who is a delegate from California, is attending the Democratic National Convention. (David Handschuh/New York Daily News)

Attorney Gloria Allred is representing two women who accused New...

FILE -- Brooklyn Assemblyman Vito Lopez at the offices of his political club in New York, Jan. 6, 2005. Lopez, the Brooklyn Democratic leader and longtime political power broker, has been stripped of his committee chairmanship and barred from employing young people after allegedly sexually harassing two women who worked in his district office in 2012. (Michael Nagle/The New York Times)

As the state attorney general's office deals with recent allegations from seven women who say they were sexually harassed by an assemblyman, state lawyers have agreed to pay millions to make claims from other state employees go away, a Times Union review of 12 years of settlement records found.

And taxpayers are spending even more -on legal fees for lawyers to help end litigation against the state and the Legislature.

Based on history, the threat of suits from the seven women against the Assembly and former Assemblyman Dennis Gabryszak are likely to become another expensive legal cost of doing business. The cost has reached about $3 billion in the past decade, according to state data analyzed by the newspaper.

From 2001 through the summer of 2012, the state spent $2.7 billion on lawyer fees and legal services for employee and commercial suits, and for corporate awards and judgments. It has paid tens of millions more for settlements, court costs and associated legal expenses to erase its backlog of disputes with employees.

The lawyer fees include costs to deal with claims, grievances, lawsuits and other potential litigation among its employees and employers and other claimants, according to data provided by the state comptroller's office in response to a Freedom of Information Law request.

The cost does not include countless hours spent by the attorney general's staff through several administrations.

Separately, the state paid $100.7 million for arbitration, a method of avoiding litigation. The money paid for arbitrators, legal aides and record-keepers during the period.

The data show the state has paid out an average of about $4 million a year to employees to resolve claims with government employers during the nearly 12-year period.

On average, it resolved 183 cases a year — mostly for relatively small sums, but with occasional seven-figure payments.

Among the more modest payouts is $103,080 to two women who complained about sexual harassment by veteran Assemblyman Vito Lopez, a Brooklyn Democrat. Lopez, who later resigned, gave the two former aides another $32,000 from his personal account to avoid litigation.

No matter the size of the payouts — which included a whopping $6.3 million to a group of Department of Environmental Conservation employees in 2004 — private lawyers involved in the cases tend to do well. They often get a third of the awards, if not more.

As for the money spent on lawyer bills, legal services, judgments and awards, the fees suggest that law firms sometimes receive payments many times the sum that employee clients took home.

"That is not unusual," said Eugene Eisner, a Manhattan attorney who has represented many state employees in cases against agencies and public colleges during the past 50 years.

He said an outside counsel hired by the state isn't as concerned about keeping costs down as the attorney general's office might be.

Firms paid by the state to represent public employees, typically to avoid conflicts with the attorney general's office, are motivated to build up their billable hours, Eisner said.

Former Gov. George Pataki used his law firm, Chadbourne & Parke, for defense in a case in which a group of sex offenders were awarded $1 judgments last year. Pataki's firm is being paid more than $1 million for stepping in for the attorney general.

And lawyers for the complainants can have their fees covered by the state if they go to court and prevail, even if the award is paltry, Eisner said.

"I have had cases over the years in which I have urged my adversary to settle because I had him dead to right and I said, 'All you are doing is running up my legal fees,'" he said.

The problem with settling, Eisner said, is that the parties sometimes are prohibited from talking about the case.

Several agencies contacted about their settlements would not discuss them, or required a Freedom of Information Law request for even general information. For instance, the Division of Military and Naval Affairs resolved a case involving Sheila Mcguire; the state cut a check for $212,000 to her in March 2012. "It is my understanding from our agency attorney that this was a settlement which occurred out of court (resolving a complaint) made by a former employee who was dismissed," said Eric Durr, a spokesman for the agency. He directed a reporter to use the Freedom of Information Law for any further details.

Typically, Eisner said, state lawyers can be unwilling to use fiscal logic to resolve matters. "I find that (Attorney General Eric) Schneiderman's office is much more reasonable than his predecessor: Cuomo was much more hard-nosed," said Eisner. "Maybe that accounts for the size of the settlements."

The settlement dollars roller-coastered during the 12-year period examined by the Times Union. In Eliot Spitzer's eight-year tenure as attorney general, which ran through 2006, payouts topped out at $7.45 million in 2006, but were as low as $1.12 million the year before. Two large settlements ended long-running cases during his terms, including DEC class action suit.

Andrew Cuomo's four-year term covered to the end of 2010. His annual settlement costs tended to be in the $4 million range, topping out at $4.66 million his first year in office and falling as low as $3.65 million his second year. Schneiderman, who took over in 2011, agreed to $2.73 million in his first year and $3.43 million through August 2012.

Two settlements during the 12-year period were very expensive. One involved eight Roswell Park Cancer Institute research scientists who said they were wrongly laid off. They split $4.26 million in 2005.

In 2004, a group of DEC employees divided a $6.29 million arbitration award. A DEC press officer was unable to discuss the case. But it may have been a wage-and-hour fair labor standards case involving forest rangers and other DEC officers, according to Albany lawyer Ron Dunn, who has represented DEC employees and other state workers.

"The total costs of defending employment-related litigation can be well beyond the settlement dollars," said John Corcoran, a Syracuse lawyer who specializes in defending public employers, including the state. "Those settlement dollars can be overshadowed by the legal defense for a case."

Although most cases are resolved outside of court for a fixed sum of perhaps $25,000, defense costs can rise to $100,000 or more for that same settlement due to briefs, motions and investigating claims, he said.

Sometimes the settlement includes an agreed-upon amount for the complainant's lawyer, or the money is paid out of the complainant's pocket, often a third of the settlement.

Lawyers brought in to handle matters for the attorney general receive a fee of about $175 per hour, said Dunn. The most common cases he sees lately involve sexual harassment and disability discrimination.

Prathima Reddy, a lawyer for one of the seven complainants against Gabryszak, said she has settled several cases involving state employees. "Our ultimate goal is to reach a resolution," she said.

Among Reddy's roster of clients is former prison doctor Gwendolyn Cole-Hoover, who received a total of $952,257 from the state. In 2007, she won two arbitration awards totaling $739,000 and followed that up with a $212,916 grievance settlement against the Department of Corrections and Community Supervision in 2009. The agreements resolved her allegations of a racially hostile workplace.

Reddy said she has contacted Schneiderman's office on behalf of her current client, Caitrin Kennedy, a former aide to Gabryszak. The Depew Democrat quit the Assembly in January after Kennedy and six other women filed sexual harassment complaints. They accused Gabryszak of creating a hostile workplace.

Reddy said the attorney general has expressed interest in settlement talks. Schneiderman's office has refused to discuss the Gabryszak case.

A lawyer for the other six alleged Gabryszak victims is involved in settlement discussions with the attorney general's office, according to a lawyer involved who spoke on the condition of anonymity.

At the same time, Terry Connors, the defense lawyer for Gabryszak, is pushing the state to cover his costs. State employees sued in job-related matters can petition to have their defense bills covered if the attorney general does not represent them.

Cases don't tend to resolve quickly. It took 14 years for eight employees of Roswell Park Cancer Institute to end their case involving wrongful dismissal and disregard for seniority. They paid about $500,000 total on an hourly rate to their lawyer, said Philip Hohmann, a researcher who got $450,654 in 2005 — one of the smaller checks. He said the attorney general's office should have settled years earlier because the evidence was so strong.

Even when they arrive, settlements don't necessarily satisfy complainants. Gloria Salerno and Emelise Aleandri, who claimed they suffered bullying, gender discrimination and retaliation from their boss at Queens College, accepted a nearly $1.1 million settlement in 2005. After they paid their attorneys, directed money to the state pension fund and covered taxes, they each received checks from the comptroller of $167,500.

Their case spanned eight years and was settled mid-trial after days of testimony that did not favor the college. Aleandri lost her job as a TV producer and Salerno lost her post administering the school's Italian-American institute.

"It was just a nightmare," said Aleandri. She and Salerno said the legal ordeal, including delay tactics by the attorney general's staff, left them unsure about the wisdom of suing the state. "They wear you out," Aleandri said. "I wish I had gotten away before there even was a settlement."